No easy solution for hospital

COLDWATER ó There will be no easy solution to the financial problems of the Community Health Center of Branch County (CHC).

And any solution will not come soon, according to Branch County administrator Bud Norman.

After trustees of the county-owned hospital recommended a sale to Community Health Systems (CHS), Norman put in a call and will schedule a meeting with that companyís officials.

Norman said the county commission is dedicated "to do what is in the best interest of the county constituents" to guarantee a health care provider.

Commissioner Rod Olney said Monday with current hospital financial problems "If we donít do something the hospital wonít be there."

CHC lost over $3 million last year and the red ink continued to increased to over $4.5 million. Cost cuts have been made in the last several months.

CHS, the large 204-hospital, publicly traded, for-profit system based in Brentwood, Tennessee offered $15 million for the public hospital.

The problem is the hospital's liabilities are a $12 million in debt plus an estimated $23 million for the unfunded portion of the hospital employee retirement program.

Norman said he has talked to Michigan Employee Retirement System (MERS) representatives about options the county may have.

"We have put our creative hats on (to come up with) different alternatives," he said.

The reason the pension liability is so high is that with a sale that pension plan would end.

"Once you stop that the employee is no longer making any contribution and it is all up to the employer," Norman explained.

The employee payment is around half of the total contribution needed to keep the plan solvent.

The system is similar to Social Security, in which current employee contributions pay current retiree benefits. The City of Coldwater this year was forced to raise taxes by one mill to fund its retirement plan.

Its required contributions went up when it ended its defined benefit plan in the 1990s. This year the increase jumped from $100,000 to over $400,000.

Norman said this was a reason the county did not change to a defined contribution plan, but instead reduced its employer-employee matching.

"If we did not have the revenue we would have to reduce services to fund it," Norman said.

The alterative would be to raise taxes "and we donít want to put an additional burden on the citizens," Norman added.

CHC's financial problems came over the last few years as federal reimbursement for Medicare and Medicaid services were reduced in favor of higher payments to doctors. Insurance companies have also cut reimbursements to rural hospitals in an effort to cut medical costs.

CHC is not alone. Non-profit hospital Oaklawn in Marshall showed a $5 million loss through this year and cut 42 employees last month ó about 5 percent of employees.

Page 2 of 2 - The other 20-plus rural hospitals in southern Michigan also have done a study, which showed they all face the financial squeeze in the current economy and health care systems.

"There is not a set timeline because we are not sure what will evolve," Norman said.